Zamara Fanaka Retirement Fund (ZFRF) has asked the government to
provide tax incentives for funds held by pension firms to enhance the
growth of the sector.
Fund chair Lucy Kambuni said
this would help the trustees diversify the asset base, which would, in
the long run, improve the returns for retirees as a many Kenyans grapple
with the high cost of living on retirement.
“Kenyans
retiring at age 55 and above today are living on about 22 per cent of
their pre-retirement salaries against the market recommended standard of
66 per cent,” she said.
“Significant changes to the law (will) encourage many Kenyans to save for their retirement.”
Zamara
executive director James Olubayi said the law capping the tax allowable
retirement contribution at Sh20,000 has remained unchanged for over two
decades and there was a need to review it.
“The rate
at which many Kenyans are retiring and thereafter live in abject poverty
is worrying and the government ought to safeguard this population by
entirely overhauling retirement policies to grow the industry instead of
piecemeal reforms that are normally effected during budget review,”
said Mr Olubayi.
According
to Zamara divisional head of umbrella and retail solutions Angela
Okinda, it may be difficult for Kenyan millennials to retire in the wake
of more needs other than saving for retirement.
“With
current unemployment rates at a high of 39.1 per cent, there is almost
no disposable income to set aside for retirement saving,” she said.
More
than 12 million working Kenyans are not enrolled in any formal pension
plan while about 10 million who are unemployed may not be saving for
their retirement.
Zamara Fanaka Retirement Fund
established in 2005 has over Sh23 billion in assets. Retirement funds in
Kenya hold about Sh1 trillion in assets.
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